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Valeant Pharmaceuticals: Why We’re Seeing Declines

By CNA Finance (Joshua Rodriguez)Stock MarketsFeb 29, 2016 11:44AM ET
www.investing.com/analysis/valeant-pharmaceuticals-(vrx)-stock:-why-we%EF%BF%BD%EF%BF%BD%EF%BF%BDre-seeing-declines-today-200119880
Valeant Pharmaceuticals: Why We’re Seeing Declines
By CNA Finance (Joshua Rodriguez)   |  Feb 29, 2016 11:44AM ET
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Valeant Pharmaceuticals (N:VRX) is having a rough day in the market today after a series of mixed news. On the good side of the coin, CEO J. Michael Pearson has completed a full recovery and has returned to his post at VRX. On the bad side of things, results have been delayed, leading to a bit of uncertainty. Today, we'll talk about the return of Pearson, what results were delayed, and what we can expect to see from VRX moving forward. So, let's get right to it...

J. Michael Pearson Has Returned

At possibly the worst timing, J. Michael Pearson took a medical leave from VRX more than a month ago has he suffered from a severe case of pneumonia. At this time, the stock struggled quite a bit as investors worried about the company's recovery without Pearson involved. Nonetheless, the team appointed to take on his role did incredibly well. Today, it was announced that Pearson would be returning to his post at Valeant effective immediately. This is incredibly good news. While the team appointed has done well, the company is definitely in need of Pearson's leadership.

While this is good news, there is some bad news that came along with the announcement. VRX was scheduled to report preliminary result from Q4 and provide updated guidance to investors relatively soon. However, given the timing of Pearson's return, the investors' call has to be pushed back. There is already a bit of uncertainty with regard to what investors can expect given the recent hardships Valeant Pharmaceuticals has faced. As a result, the delay adds to the uncertainty and is becoming a big reason for declines. In a statement, J. Michael Pearson had the following to say with regard to his return...

I want to express my sincere gratitude to Howard for his willingness to step in and lead the company through a challenging period... I realize that recent events are disappointing to everyone and it is my responsibility to set the appropriate tone for the organization. My immediate priority will be to build stronger relationships with important constituents, such as managed care and other channel partners, regulators and government representatives, while improving Valeant's reporting procedures, internal controls and transparency. I will focus on the retention and enhancement of our management teams and employee groups around the world and ensure that we maintain a culture that adheres to the highest ethical standards. Finally, we expect to deliver strong operating performance going forward by working closely with physicians to better serve patients, and we remain committed to reducing our leverage.”

How The Market Reacted To The News

As investors, we know that the news moves the market. In this particular case, there was a bit of good news in the fact that Pearson has made it back to VRX. However, there was also a bit of bad news in the fact that results and guidance are being delayed. Given the current circumstances revolving around Valeant, the delay in results and guidance is leading to investor fear. As a result, we're seeing sharp declines in the value of the stock today. Currently (10:10), VRX is trading at $73.20 per share after a loss of $7.45 per share or 9.24% thus far today.

What We Can Expect To See Moving Forward

While I know I'm probably going to catch some flack for the bears for my opinion here, I believe that we're going to see relatively positive movement out of VRX moving forward. The reality is that when we talk about Valeant, we're talking about an incredible company. While they have had to get over hurdles as of late, the company has a long list of great products and has put together a solid plan for growth. Now that Pearson is back, I'm expecting for things to move in the right direction relatively quickly. All in all, my view of VRX is positive.

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Valeant Pharmaceuticals: Why We’re Seeing Declines
 

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Valeant Pharmaceuticals: Why We’re Seeing Declines

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